The irreversibility effect and agency conflicts

The irreversibility effect and agency conflicts

This paper studies the influence of agency conflicts on the irreversibility effect. Using a dynamic variant of the static Baron and Myerson (Econometrica 50(4):911–930, 1982 ) adverse selection model, we characterize under which circumstances the irreversibility effect arises in the presence and abs...

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Veröffentlicht in:Theory and decision 2013-02, Vol.74 (2), p.219-239
Hauptverfasser: Löffler, Clemens, Pfeiffer, Thomas, Schneider, Georg
Format: Artikel
Sprache:eng
Schlagworte:
Adverse selection
Agency
Agency theory
Applied sciences
Behavioral/Experimental Economics
Conflict
Costs
Decision making
Decision theory
Dynamics
Econometrics
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Exact sciences and technology
Expected values
Finance
Firm modelling
Game Theory
Insurance
Management
Operational research and scientific management
Operational research. Management science
Operations Research/Decision Theory
Social and Behav. Sciences
Statics
Statistics for Business
Studies
Uncertainty
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Beschreibung
Zusammenfassung:This paper studies the influence of agency conflicts on the irreversibility effect. Using a dynamic variant of the static Baron and Myerson (Econometrica 50(4):911–930, 1982 ) adverse selection model, we characterize under which circumstances the irreversibility effect arises in the presence and absence of an agency conflict. In particular, we find that in the presence of an agency conflict the irreversibility effect arises in more circumstances than in the standard first-best analysis that abstracts from agency problems.
ISSN:0040-5833
1573-7187
DOI:10.1007/s11238-012-9331-6